March 26, 2003
AccountAbility Launches Assurance Standard for Corporate Responsibility Reporting
by William Baue
Investors and other stakeholders stand to benefit from the standardized verification of corporate
reporting on social, environmental, and economic performance.
As corporate reporting on social, environmental, and economic performance has become more
prevalent, investors are increasingly seeking mechanisms to verify the accuracy, comparability, and
relevance of such reporting. Yesterday saw the launch in London of just such a mechanism, the
AA1000 Assurance Standard by AccountAbility. AccountAbility is an international
nonprofit institute dedicated to promoting both accountability and sustainability.
"The AA1000 Assurance Standard provides an antidote for the growing crisis of confidence
in business," said Tom Delfgaauw, the AccountAbility chair. Mr. Delfgaauw is also former vice
president of sustainable development for Shell (ticker: RD), an
Several AccountAbility members have already begun using the
AA1000 Assurance Standard in its draft form. These member-users include corporations such as the
Danish pharmaceutical company Novo Nordisk (NVO) and the UK-based
Bank (CPBB_p.L), as well as firms that already offer verification services such as
PricewaterhouseCoopers and KPMG (KCIN). AccountAbility's
membership also includes nongovernmental organizations (NGOs) such as Forum for the Future and the
New Economics Foundation.
"Sustainability reports will not have a shred of credibility for
NGOs if they are not externally verified using a generally accepted framework," said Ed Mayo,
executive director of the New Economics Foundation.
The AA1000 Assurance Standard seeks
to remedy the credibility gap in corporate responsibility reporting by creating just such an
assurance framework, the first in the world to be offered on a non-proprietary platform. AA1000 is
free, publicly accessible, and open-source, meaning that it will continue to be developed in
collaboration with its users.
The AA1000 Assurance Standard is not meant to replace or
compete against existing corporate responsibility reporting mechanisms such as the Global Reporting Initiative (GRI)
Sustainability Reporting Guidelines. AccountAbility designed the Assurance Standard to complement
these existing mechanisms.
"As the transparency initiative continues to drive demand for
sustainability reporting to new levels, assurance has a key role to play in the future of
reporting," said Ernst Ligteringen, CEO of the GRI. "The GRI welcomes AccountAbility's important
contributions towards advancing work in this area."
As a complement to the launch of the
AA1000 Assurance Standard, AccountAbility also released a report entitled The State of
Sustainability Assurance. AccountAbility plans to issue this report annually. The report
points out that the SRI community highly values corporate responsibility reporting assurance but
lacks the resources necessary to carry out assurance of its own research, much less demand
assurance of others. The report describes this phenomenon anecdotally.
"As one SRI
person concluded with some regret, 'to be frank, hardly any of our data is formally assured,
certainly not the bulk that we get through questionnaires. Assurance is important of course, but
we are not really at that point, and in any case we do not think much of the current approaches.'"
The AA1000 Assurance Standard will offer social investors the opportunity to evaluate
their holdings' corporate responsibility reporting. Before now, investors have had to accept the
accuracy and reliability of corporate responsibility report audits on faith. However, blind trust
in the auditing profession seems misplaced after the events of the past few years.
[Arthur] Andersen fiasco raised profound questions around traditional forms of assurance," said
John Elkington, chair of SustainAbility, a London-based research and consultancy firm specializing
in its namesake issue. "The AA1000 Assurance Standard offers a unique opportunity to resurrect
assurance, phoenix-like, from the ashes of Enron, WorldCom and other trust-eroding corporate